Hedge FundStrategy: Mergers & Takeovers Arbitrage. http://www.financial-spread-betting.com/Spread-trading-faqs.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Hedge funds trading strategies - hedge funds will implement specific strategies and bolt them into each individual fund they have and one of the things they do is merger arbitrage. Merger Arbitrage Strategy Explained. This is basically trading in companies involved in pending mergers/acquisitions
The way I understand it is that when a company X bids to acquire another company Y the price of x will typically trade at a discount to the offered price because it is not certain that the deal will go thru. A hedge fund will calculate their risk:reward and may decide to buy company X because they believe there is a high chance of the bid succeeding. Very occasionally it will open at a higher price than the offered price and this is because the market believe that the initial bid will be refused and company Y will then offer a higher price offer.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund Merger Arbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

published:12 Jan 2018

views:626

Michael describes how Morgan Cradock helped two clients to raise capital. The first being ATSA that tripled group revenues with an acquisition and bank finance. The second being GPVProperty that secured $1.5m in equity capital in 30 days.

published:12 Feb 2012

views:125

The mechanics of a simple leveraged buy-out. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/corporate-debt-versus-traditional-mortgages?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/simple-merger-arb-with-share-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Private equity firms often borrow money (use leverage) to buy companies. This tutorial explains how they do it and pay the debt.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

published:12 May 2011

views:209294

“Until we can get a share price that recognises what we’re doing and how we’re outperforming the market, I do not see it as an opportunity of raising equity in the market.” Those are the comments of David Wright, the chief executive of PortaCommunications (LON:PTCM), who says that while there are acquisition targets out there, the PR and communications group “would have to be a bit more creative how we get our money”.

published:11 Feb 2015

views:207

#mergers #corporatelaw #businesslaw
http://cenkuslaw.com
http://braatenwoods.com
In the Main Street to lower-middle market ($1 million - $25 million), we often deal with three different types of buyers. Each buyer has their own motivations, ways of doing business, and characteristics you should consider when dealing with them while selling your business. So, we're going to cover each of these three types of buyers in the is three-part (go figure) series.
In this video, I'll introduce you to the mind of the financial - or private equity - buyer. Private equity investors generally work with a large pool of money and may be working to collect and merge a sum of small businesses in your industry.
If you're dealing with a private equity firm looking to buy your business, know that you're dealing with a seasoned buyer. As I touch on in the video, this is both a benefit and a factor you should give some consideration.
As always, watch the video and feel free to reach out with any questions. Leave a comment or contact me.
_____________________________________________
For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
https://twitter.com/BCenkus
http://www.cenkuslaw.com
http://www.cenkus.com
_______________________________________________
About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders' agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as ChiefLegal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built ParagonResidentialMortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

Mechanics of a share-based acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/price-behavior-after-announced-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/dilution-tutorial/v/stock-dilution?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Companies often buy or merge with other companies using shares (which is sometimes less intuitive than when they use cash). This tutorial walks through the mechanics of how this happens and details what is likely to happen in the public markets because of the transaction (including opportunities for arbitrage).
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

published:12 May 2011

views:72336

In this merger model lesson, you'll learn how a company might decide what mix of cash, debt, and stock it might use to fund...
By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
... might use to fund a merger or an acquisition - and you'll understand how to determine the appropriate amount of each one in a deal.
2:24 General Order of Funding for M&A Deals
4:49 Cash - How Much Can You Use?
9:56 Debt - How Much Can You Use?
14:08 Stock - How Much Can You Use?
16:32 Exceptions
18:03 Recap and Summary
How Do You Determine the Cash / Stock / Debt Mix in an M&A Deal?
Very common interview question, and you also need to know it for what you do on the job.
3 ways to fund a company, and to fund acquisitions of other companies: use cash on-hand, borrow the money from other entities (debt), or issue equity (stock) to new investors.
But how does a buyer in an M&A deal decide whether it should use…
50% debt and 50% stock vs.
33% debt, 33% stock, and 33% cash vs.
50% cash and 50% debt vs….
And the list goes on.
Easiest: Think about the "cost" of each method, start with the cheapest method, use the most of THAT method that you can, and then move to the next cheapest method, and continue like that.
GENERALLY:
Cheapest: Cash, since interest rates on cash are lower than interest rates on debt, and tend to be low in general.
Next Cheapest: Debt, since it is still cheaper than equity and since interest paid on debt is tax-deductible.
Most Expensive: Stock, since the Cost of Equity tends to exceed the Cost of Debt… in theory and in practice.
To Compare Them: Look at the "After-Tax Yields"… for debt and cash, just take the Interest Rate and multiply by (1 - Buyer's Tax Rate).
Stock: Take the buyer's Net Income and divide by its Equity Value (or "flip" its P / E multiple).
SO: Always start with cash, use the most you can, then move to debt, use the most you can, and finish up with stock.
Cash - How Much is "The MostYou Can?"
Easy: Company has minimal cash and can't use anything, or it has a huge cash balance and can use all of it.
More CommonCase: Look at the company's "minimum" cash balance and use the excess cash above that to fund the deal.
EX: Company has $500 million in cash right now, but its minimum cash balance to keep operating is $200 million…
So it can use $300 million of its cash to fund the deal.
How to Determine: Can be tough, but sometimes companies disclose it…
...or you can look back at historical cash balances and make a guesstimate based on that (what was its lowest cash balance in past years?).
Debt - How Much Can You Use?
So let's say you've now used $300 million of cash to fund the deal… but it's a deal for $1 billion total.
How much debt can you use to fund the remainder? $700 million? $300 million? $500 million?
Easiest Method: Calculate the key credit stats and ratios for the combined company - for example:
Total Debt / EBITDA
Net Debt / EBITDA
EBITDA / Interest Expense
And see what amount of debt makes these look "reasonable", in line with historical figures and also figures for comparable companies.
EX: Let's say that if the company uses $500 million of debt, its Debt / EBITDA is 4x.
Historically, it has been around 2-3x, and no peer company is levered at more than 3.5x.
If that's the case, we'd say that 3.5x - 4.0x is probably the "maximum" (whatever amount of debt that means).
Here: We have the Debt / EBITDA and other ratios for the Men's Wearhouse / Jos. A. Bank peer companies.
Stock - Now What?
Often used as the "method of last resort" because:
A) It tends to be the most expensive method for most companies.
B) Most acquirers don't like giving up ownership and diluting existing shareholders unless absolutely necessary.
So in this example, if we've used $300 million of cash and $500 million of debt, we're still not quite at $1 billion... need an extra $200 million, which we can get by issuing stock.
# of Shares = $200 million / Buyer's Share Price.
Technically, there's no real "limit," but it would be very odd for a company to give up more than, say, 50% ownership to another company… unless they're very close in size.
Exceptions:
Buyer has an exceptionally high P / E multiple (Amazon) - stock might be the cheapest!
Buyer wants to do a tax-free deal (Google / YouTube) and it's much bigger anyway, so won't make a difference.
Companies are similarly sized - stock might always be necessary because cash/debt are implausible (mergers of equals).
Summary
Which purchase method do you use?
MOST relevant when companies are closer in size… doesn't make much difference when the buyer is 100x or 1000x bigger than the seller.
Order:
1. Cash - Any excess cash above the company's minimum cash balance.
2. Debt - To the upper range of the Debt / EBITDA of comparables (and other metrics).
3. Stock - For any remaining funding that's required; ideally give up well under 50% ownership.

published:21 Oct 2014

views:30224

Simple case of merger arbitrage when there is an all cash acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/investment-consumption/v/risk-and-reward-introduction?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/hedge-funds/v/hedge-fund-strategies-long-short-2?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Hedge funds have absolutely nothing to do with shrubbery. Their name comes from the fact that early hedge funds (and some current ones) tried to "hedge" their exposure to the market (so they could, in theory, do well in an "up" or "down" market as long as they were good at picking the good companies). Today, hedge funds represent a huge class investment funds. They are far less regulated than, say, mutual funds. In exchange for this, they aren't allowed to market or take investments from "unsophisticated" investors. Some use their flexibility to mitigate risk, other use it to amplify it.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

published:11 May 2011

views:107765

Hedge Funds versus Mutual Funds. http://www.financial-spread-betting.com/course/technical-analysis.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! What is the difference between traditional funds and hedge funds? Are these the same or different? Both hedge funds and mutual funds are managed by a portfolio fund manager.
Hedge funds are managed actively by a hedge fund manager who will decide where to allocate capital and different trading ideas. A hedge fund can go long or short - they have multiple different ways to express an idea so they have more flexibility. You can't really put a very small amount with a hedge fund - there are barriers to entry. Performance remuneration is very much performance based - typically 2% management fee, 20% performance fee. Some of these hedge funds are quite high risk...Mutual funds are much more geared towards picking assets that will increase in value in the long term. Mutual funds are very regulated and limited to what they can charge and the fee structure is made very clear.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund MergerArbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

published:08 Jan 2018

views:2062

Buying a Business 12: You can strip unneeded assets out of both the acquirer and target firms to pay for acquisitions and streamline the businesses.

Khan Academy

Khan Academy is a non-profit educational organization created in 2006 by educator Salman Khan with the aim of providing a free, world-class education for anyone, anywhere. The organization produces short lectures in the form of YouTube videos. In addition to micro lectures, the organization's website features practice exercises and tools for educators. All resources are available for free to anyone around the world. The main language of the website is English, but the content is also available in other languages.

In late 2004, Khan began tutoring his cousin Nadia who needed help with math using Yahoo!'s Doodle notepad.When other relatives and friends sought similar help, he decided that it would be more practical to distribute the tutorials on YouTube. The videos' popularity and the testimonials of appreciative students prompted Khan to quit his job in finance as a hedge fund analyst at Connective Capital Management in 2009, and focus on the tutorials (then released under the moniker "Khan Academy") full-time.

130–30 fund

A 130–30 fund or a ratio up to 150/50 is a type of collective investment vehicle, often a type of specialty mutual fund, but which allows the fund manager simultaneously to hold both long and short positions on different equities in the fund. Traditionally, mutual funds were long-only investments. 130–30 funds are a fast-growing segment of the financial industry; they should be available both as traditional mutual funds, and as exchange-traded funds (ETFs). While this type of investment has existed for a while in the hedge fund industry, its availability for retail investors is relatively new.

A 130–30 fund is considered a long-short equity fund, meaning it goes both long and short at the same time. The "130" portion stands for 130% exposure to its long portfolio and the "30" portion stands for 30% exposure to its short portfolio. The structure usually ranges from 120–20 up to 150–50 with 130–30 being the most popular and is limited to 150/50 because of Reg T limiting the short side to 50%.

International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage

The International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992, often referred to as FUND92 or FUND, is an international maritime treaty. The original FUND convention in 1969 was drawn up as an enhancement to CLC meant on one hand to relieve shipowners from unfair liabilities due to unforeseeable circumstances and on the other hand remove liability caps that some member states thought were too low. The fund is obliged to pay victims of pollution when damages exceed the shipowner's liability, when there is no liable shipowner, or when the shipowner is unable to pay its liability. The fund is also required to "indemnify the shipowner or his insurer" in spills where a ship is in full compliance with international conventions, and no wilful misconduct caused the spill.

The name "hedge fund" originated from the paired long and short positions that the first of these funds used to hedge market risk. Over time, the types and nature of the hedging concepts expanded, as did the different types of investment vehicles. Today, hedge funds engage in a diverse range of markets and strategies and employ a wide variety of financial instruments and risk management techniques.

Capital market

Capital markets are financial markets for the buying and selling of long-term debt or equity-backed securities. These markets channel the wealth of savers to those who can put it to long-term productive use, such as companies or governments making long-term investments. Capital markets are defined as markets in which money is provided for periods longer than a year.
Financial regulators, such as the UK's Bank of England (BoE) or the U.S. Securities and Exchange Commission (SEC), oversee the capital markets in their jurisdictions to protect investors against fraud, among other duties.

Modern capital markets are almost invariably hosted on computer-based electronic trading systems; most can be accessed only by entities within the financial sector or the treasury departments of governments and corporations, but some can be accessed directly by the public. There are many thousands of such systems, most serving only small parts of the overall capital markets. Entities hosting the systems include stock exchanges, investment banks, and government departments. Physically the systems are hosted all over the world, though they tend to be concentrated in financial centres like London, New York, and Hong Kong.

Financial capital

Financial capital is any economic resource measured in terms of money used by entrepreneurs and businesses to buy what they need to make their products or to provide their services to the sector of the economy upon which their operation is based, i.e. retail, corporate, investment banking, etc.

Three concepts of capital maintenance authorized in IFRS

Financial capital or just capital/equity in finance, accounting and economics, is internal retained earnings generated by the entity or funds provided by lenders (and investors) to businesses to purchase real capital equipment or services for producing new goods/services. Real capital or economic capital comprises physical goods that assist in the production of other goods and services, e.g. shovels for gravediggers, sewing machines for tailors, or machinery and tooling for factories.

Financial capital generally refers to saved-up financial wealth, especially that used to start or maintain a business. A financial concept of capital is adopted by most entities in preparing their financial reports. Under a financial concept of capital, such as invested money or invested purchasing power, capital is synonymous with the net assets or equity of the entity. Under a physical concept of capital, such as operating capability, capital is regarded as the productive capacity of the entity based on, for example, units of output per day. Financial capital maintenance can be measured in either nominal monetary units or units of constant purchasing power. There are thus three concepts of capital maintenance in terms of International Financial Reporting Standards (IFRS): (1) Physical capital maintenance (2) Financial capital maintenance in nominal monetary units (3) Financial capital maintenance in units of constant purchasing power. Framework for the Preparation and Presentation of Financial Statements,

Private equity

A private equity investment will generally be made by a private equity firm, a venture capital firm or an angel investor. Each of these categories of investor has its own set of goals, preferences and investment strategies; however, all provide working capital to a target company to nurture expansion, new-product development, or restructuring of the company’s operations, management, or ownership.

Hedge FundStrategy: Mergers & Takeovers Arbitrage. http://www.financial-spread-betting.com/Spread-trading-faqs.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Hedge funds trading strategies - hedge funds will implement specific strategies and bolt them into each individual fund they have and one of the things they do is merger arbitrage. Merger Arbitrage Strategy Explained. This is basically trading in companies involved in pending mergers/acquisitions
The way I understand it is that when a company X bids to acquire another company Y the price of x will typically trade at a discount to the offered price because it is not certain that the deal will go thru. A hedge fund will calculate their risk:reward and may decide to buy company X because they believe there is a high chance of the bid succeeding. Very occasionally it will open at a higher price than the offered price and this is because the market believe that the initial bid will be refused and company Y will then offer a higher price offer.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund Merger Arbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

2:26

Raising bank finance to fund acquisitions

Raising bank finance to fund acquisitions

Raising bank finance to fund acquisitions

Michael describes how Morgan Cradock helped two clients to raise capital. The first being ATSA that tripled group revenues with an acquisition and bank finance. The second being GPVProperty that secured $1.5m in equity capital in 30 days.

The mechanics of a simple leveraged buy-out. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/corporate-debt-versus-traditional-mortgages?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/simple-merger-arb-with-share-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Private equity firms often borrow money (use leverage) to buy companies. This tutorial explains how they do it and pay the debt.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

6:37

Porta Communications CEO would not consider placing to fund acquisitions at current share price

Porta Communications CEO would not consider placing to fund acquisitions at current share price

Porta Communications CEO would not consider placing to fund acquisitions at current share price

“Until we can get a share price that recognises what we’re doing and how we’re outperforming the market, I do not see it as an opportunity of raising equity in the market.” Those are the comments of David Wright, the chief executive of PortaCommunications (LON:PTCM), who says that while there are acquisition targets out there, the PR and communications group “would have to be a bit more creative how we get our money”.

7:44

Understanding Private Equity Buyers in Mergers and Acquisitions

Understanding Private Equity Buyers in Mergers and Acquisitions

Understanding Private Equity Buyers in Mergers and Acquisitions

#mergers #corporatelaw #businesslaw
http://cenkuslaw.com
http://braatenwoods.com
In the Main Street to lower-middle market ($1 million - $25 million), we often deal with three different types of buyers. Each buyer has their own motivations, ways of doing business, and characteristics you should consider when dealing with them while selling your business. So, we're going to cover each of these three types of buyers in the is three-part (go figure) series.
In this video, I'll introduce you to the mind of the financial - or private equity - buyer. Private equity investors generally work with a large pool of money and may be working to collect and merge a sum of small businesses in your industry.
If you're dealing with a private equity firm looking to buy your business, know that you're dealing with a seasoned buyer. As I touch on in the video, this is both a benefit and a factor you should give some consideration.
As always, watch the video and feel free to reach out with any questions. Leave a comment or contact me.
_____________________________________________
For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
https://twitter.com/BCenkus
http://www.cenkuslaw.com
http://www.cenkus.com
_______________________________________________
About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders' agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as ChiefLegal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built ParagonResidentialMortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

Mechanics of a share-based acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/price-behavior-after-announced-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/dilution-tutorial/v/stock-dilution?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Companies often buy or merge with other companies using shares (which is sometimes less intuitive than when they use cash). This tutorial walks through the mechanics of how this happens and details what is likely to happen in the public markets because of the transaction (including opportunities for arbitrage).
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

19:59

Merger Model: Cash, Debt, and Stock Mix

Merger Model: Cash, Debt, and Stock Mix

Merger Model: Cash, Debt, and Stock Mix

In this merger model lesson, you'll learn how a company might decide what mix of cash, debt, and stock it might use to fund...
By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
... might use to fund a merger or an acquisition - and you'll understand how to determine the appropriate amount of each one in a deal.
2:24 General Order of Funding for M&A Deals
4:49 Cash - How Much Can You Use?
9:56 Debt - How Much Can You Use?
14:08 Stock - How Much Can You Use?
16:32 Exceptions
18:03 Recap and Summary
How Do You Determine the Cash / Stock / Debt Mix in an M&A Deal?
Very common interview question, and you also need to know it for what you do on the job.
3 ways to fund a company, and to fund acquisitions of other companies: use cash on-hand, borrow the money from other entities (debt), or issue equity (stock) to new investors.
But how does a buyer in an M&A deal decide whether it should use…
50% debt and 50% stock vs.
33% debt, 33% stock, and 33% cash vs.
50% cash and 50% debt vs….
And the list goes on.
Easiest: Think about the "cost" of each method, start with the cheapest method, use the most of THAT method that you can, and then move to the next cheapest method, and continue like that.
GENERALLY:
Cheapest: Cash, since interest rates on cash are lower than interest rates on debt, and tend to be low in general.
Next Cheapest: Debt, since it is still cheaper than equity and since interest paid on debt is tax-deductible.
Most Expensive: Stock, since the Cost of Equity tends to exceed the Cost of Debt… in theory and in practice.
To Compare Them: Look at the "After-Tax Yields"… for debt and cash, just take the Interest Rate and multiply by (1 - Buyer's Tax Rate).
Stock: Take the buyer's Net Income and divide by its Equity Value (or "flip" its P / E multiple).
SO: Always start with cash, use the most you can, then move to debt, use the most you can, and finish up with stock.
Cash - How Much is "The MostYou Can?"
Easy: Company has minimal cash and can't use anything, or it has a huge cash balance and can use all of it.
More CommonCase: Look at the company's "minimum" cash balance and use the excess cash above that to fund the deal.
EX: Company has $500 million in cash right now, but its minimum cash balance to keep operating is $200 million…
So it can use $300 million of its cash to fund the deal.
How to Determine: Can be tough, but sometimes companies disclose it…
...or you can look back at historical cash balances and make a guesstimate based on that (what was its lowest cash balance in past years?).
Debt - How Much Can You Use?
So let's say you've now used $300 million of cash to fund the deal… but it's a deal for $1 billion total.
How much debt can you use to fund the remainder? $700 million? $300 million? $500 million?
Easiest Method: Calculate the key credit stats and ratios for the combined company - for example:
Total Debt / EBITDA
Net Debt / EBITDA
EBITDA / Interest Expense
And see what amount of debt makes these look "reasonable", in line with historical figures and also figures for comparable companies.
EX: Let's say that if the company uses $500 million of debt, its Debt / EBITDA is 4x.
Historically, it has been around 2-3x, and no peer company is levered at more than 3.5x.
If that's the case, we'd say that 3.5x - 4.0x is probably the "maximum" (whatever amount of debt that means).
Here: We have the Debt / EBITDA and other ratios for the Men's Wearhouse / Jos. A. Bank peer companies.
Stock - Now What?
Often used as the "method of last resort" because:
A) It tends to be the most expensive method for most companies.
B) Most acquirers don't like giving up ownership and diluting existing shareholders unless absolutely necessary.
So in this example, if we've used $300 million of cash and $500 million of debt, we're still not quite at $1 billion... need an extra $200 million, which we can get by issuing stock.
# of Shares = $200 million / Buyer's Share Price.
Technically, there's no real "limit," but it would be very odd for a company to give up more than, say, 50% ownership to another company… unless they're very close in size.
Exceptions:
Buyer has an exceptionally high P / E multiple (Amazon) - stock might be the cheapest!
Buyer wants to do a tax-free deal (Google / YouTube) and it's much bigger anyway, so won't make a difference.
Companies are similarly sized - stock might always be necessary because cash/debt are implausible (mergers of equals).
Summary
Which purchase method do you use?
MOST relevant when companies are closer in size… doesn't make much difference when the buyer is 100x or 1000x bigger than the seller.
Order:
1. Cash - Any excess cash above the company's minimum cash balance.
2. Debt - To the upper range of the Debt / EBITDA of comparables (and other metrics).
3. Stock - For any remaining funding that's required; ideally give up well under 50% ownership.

Simple case of merger arbitrage when there is an all cash acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/investment-consumption/v/risk-and-reward-introduction?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/hedge-funds/v/hedge-fund-strategies-long-short-2?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Hedge funds have absolutely nothing to do with shrubbery. Their name comes from the fact that early hedge funds (and some current ones) tried to "hedge" their exposure to the market (so they could, in theory, do well in an "up" or "down" market as long as they were good at picking the good companies). Today, hedge funds represent a huge class investment funds. They are far less regulated than, say, mutual funds. In exchange for this, they aren't allowed to market or take investments from "unsophisticated" investors. Some use their flexibility to mitigate risk, other use it to amplify it.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Hedge Funds versus Mutual Funds. http://www.financial-spread-betting.com/course/technical-analysis.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! What is the difference between traditional funds and hedge funds? Are these the same or different? Both hedge funds and mutual funds are managed by a portfolio fund manager.
Hedge funds are managed actively by a hedge fund manager who will decide where to allocate capital and different trading ideas. A hedge fund can go long or short - they have multiple different ways to express an idea so they have more flexibility. You can't really put a very small amount with a hedge fund - there are barriers to entry. Performance remuneration is very much performance based - typically 2% management fee, 20% performance fee. Some of these hedge funds are quite high risk...Mutual funds are much more geared towards picking assets that will increase in value in the long term. Mutual funds are very regulated and limited to what they can charge and the fee structure is made very clear.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund MergerArbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

1:44

Asset stripping can help fund acquisitions

Asset stripping can help fund acquisitions

Asset stripping can help fund acquisitions

Buying a Business 12: You can strip unneeded assets out of both the acquirer and target firms to pay for acquisitions and streamline the businesses.

13:15

Mergers and Acquisitions Explained: A Crash Course on M&A

Mergers and Acquisitions Explained: A Crash Course on M&A

Mergers and Acquisitions Explained: A Crash Course on M&A

http://cenkuslaw.com
Mergers & Acquisitions (commonly referred to as M&A) is often considered a fast-paced, exciting niche of corporate law. And, it is. I love the work I do and my role in M&A deals. So, this video addresses a lot of common questions regarding M&A.
We'll take a look at what M&A is, types of deal structures, the key players, the motivations for performing a merger or acquisition, and what deals looks like at different levels of the market.
Here's a quick rundown in case you want to jump ahead:
0:44 - What is M&A generally
01:04 - Asset Sales, Stock Sales and Mergers
04:28 - Why do Sellers Sell a Business?
05:19 - Why do Buyers Buy a Business?
06:40 - Who's Involved in the M&A Process?
06:42 - Investment Brokers and Investment Bankers
09:23 - CorporateLawyers
10:47 - Business Appraisers, Accountants & Consultants
So, take a look and let me know what you think!
_____________________________________________
For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
https://twitter.com/BCenkus
http://www.cenkuslaw.com
http://www.cenkus.com
_______________________________________________
About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders' agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as ChiefLegal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built ParagonResidentialMortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

Review: Private Equity, Direct Investing, Fund Investing, Co-investing and Secondary Investing
Investors can invest in private equity in four different ways:
Directly, funds, co-investments and secondaries.
Direct investing is when an investor directly invests in private companies. It could be buying the entire company or a minority investment.
Fund investing is when an investor goes to a private equity fund and the private equity fund buys companies on the investor’s behalf.
Co-investing is the most complicated option. For example, an investor invests $50 million in a private equity fund with co-investment rights, meaning that when the fund looks for opportunities it can allow the investor to participate not only through the fund, but directly as well.
An example of this would be when a fund is looking at investment in a $40 million company. That investment needs $30 million equity and $10 million in debt. The equity portion given by the fund (without co-investing) would be $30 million dollars. In the case of co-investing, the fund gives $20 million (in which the investor is participating through the fund) with the remaining $10 million (i.e. The difference between the $20 million in equity given by the fund and the $30 million equity needed) is offered to the investor to do on a direct basis resulting in the fund investing $20 million and the investor investing $10 million.
When investors invest into a fund, they pay full fees, typically paying a 2% management fee and a 20% performance fee (i.e. “two and twenty”). By investing $10 million directly, other than a small deal origination fee, investors are able to reduce their overall fees. (For more on fees see Video #4).
The fourth way to invest in private equity is through secondaries. In this example our investor makes a commitment to invest $50 million in a private equity fund by giving about $10 to $20 million dollars to the private equity fund up front for the first two fund investments. As more acquisitions are made, the private equity fund makes capital calls to the investor. The investor is usually locked into the private equity fund for seven to ten years (or longer). If the investor wants out of this agreement, the commitment can be sold to other investors. The sale can be of the entire commitment (which would include the existing deals that the private equity fund was already made, plus future capital calls) or it can be done through a structured secondary (selling different parts) where the investor may want to keep the existing investments and just sell the future commitments. As easy as an investor can sell a secondary, it can buy one as well.

Funding the Acquisition: The Nuts and Bolts of Debt Financing

Hedge FundStrategy: Mergers & Takeovers Arbitrage. http://www.financial-spread-betting.com/Spread-trading-faqs.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Hedge funds trading strategies - hedge funds will implement specific strategies and bolt them into each individual fund they have and one of the things they do is merger arbitrage. Merger Arbitrage Strategy Explained. This is basically trading in companies involved in pending mergers/acquisitions
The way I understand it is that when a company X bids to acquire another company Y the price of x will typically trade at a discount to the offered price because it is not certain that the deal will go thru. A hedge fund will calculate their risk:reward and may decide to buy company X because they believe there is a high chan...

published: 12 Jan 2018

Raising bank finance to fund acquisitions

Michael describes how Morgan Cradock helped two clients to raise capital. The first being ATSA that tripled group revenues with an acquisition and bank finance. The second being GPVProperty that secured $1.5m in equity capital in 30 days.

The mechanics of a simple leveraged buy-out. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/corporate-debt-versus-traditional-mortgages?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/simple-merger-arb-with-share-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Private equity firms often borrow money (use leverage) to buy companies. This tutorial explains how they do it and pay the debt.
About Khan Academy: Khan Academy offers practice exercises, instruc...

published: 12 May 2011

Porta Communications CEO would not consider placing to fund acquisitions at current share price

“Until we can get a share price that recognises what we’re doing and how we’re outperforming the market, I do not see it as an opportunity of raising equity in the market.” Those are the comments of David Wright, the chief executive of PortaCommunications (LON:PTCM), who says that while there are acquisition targets out there, the PR and communications group “would have to be a bit more creative how we get our money”.

published: 11 Feb 2015

Understanding Private Equity Buyers in Mergers and Acquisitions

#mergers #corporatelaw #businesslaw
http://cenkuslaw.com
http://braatenwoods.com
In the Main Street to lower-middle market ($1 million - $25 million), we often deal with three different types of buyers. Each buyer has their own motivations, ways of doing business, and characteristics you should consider when dealing with them while selling your business. So, we're going to cover each of these three types of buyers in the is three-part (go figure) series.
In this video, I'll introduce you to the mind of the financial - or private equity - buyer. Private equity investors generally work with a large pool of money and may be working to collect and merge a sum of small businesses in your industry.
If you're dealing with a private equity firm looking to buy your business, know that you're de...

Mechanics of a share-based acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/price-behavior-after-announced-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/dilution-tutorial/v/stock-dilution?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Companies often buy or merge with other companies using shares (which is sometimes less intuitive than when they use cash). This tutorial walks through the mechanics of how this happens and details what is likely to happen in ...

published: 12 May 2011

Merger Model: Cash, Debt, and Stock Mix

In this merger model lesson, you'll learn how a company might decide what mix of cash, debt, and stock it might use to fund...
By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
... might use to fund a merger or an acquisition - and you'll understand how to determine the appropriate amount of each one in a deal.
2:24 General Order of Funding for M&A Deals
4:49 Cash - How Much Can You Use?
9:56 Debt - How Much Can You Use?
14:08 Stock - How Much Can You Use?
16:32 Exceptions
18:03 Recap and Summary
How Do You Determine the Cash / Stock / Debt Mix in an M&A Deal?
Very common interview question, and you also need to know it for what you do on the job.
3 ways to fund a company, and to fund acquisitions of other companies...

Simple case of merger arbitrage when there is an all cash acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/investment-consumption/v/risk-and-reward-introduction?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/hedge-funds/v/hedge-fund-strategies-long-short-2?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Hedge funds have absolutely nothing to do with shrubbery. Their name comes from the fact that early hedge funds (and some current ones) tried to "hedge" their exposure...

Hedge Funds versus Mutual Funds. http://www.financial-spread-betting.com/course/technical-analysis.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! What is the difference between traditional funds and hedge funds? Are these the same or different? Both hedge funds and mutual funds are managed by a portfolio fund manager.
Hedge funds are managed actively by a hedge fund manager who will decide where to allocate capital and different trading ideas. A hedge fund can go long or short - they have multiple different ways to express an idea so they have more flexibility. You can't really put a very small amount with a hedge fund - there are barriers to entry. Performance remuneration is very much performance based - typically 2% management fee, 20% performance fee. Some of these h...

published: 08 Jan 2018

Asset stripping can help fund acquisitions

Buying a Business 12: You can strip unneeded assets out of both the acquirer and target firms to pay for acquisitions and streamline the businesses.

published: 30 Jun 2008

Mergers and Acquisitions Explained: A Crash Course on M&A

http://cenkuslaw.com
Mergers & Acquisitions (commonly referred to as M&A) is often considered a fast-paced, exciting niche of corporate law. And, it is. I love the work I do and my role in M&A deals. So, this video addresses a lot of common questions regarding M&A.
We'll take a look at what M&A is, types of deal structures, the key players, the motivations for performing a merger or acquisition, and what deals looks like at different levels of the market.
Here's a quick rundown in case you want to jump ahead:
0:44 - What is M&A generally
01:04 - Asset Sales, Stock Sales and Mergers
04:28 - Why do Sellers Sell a Business?
05:19 - Why do Buyers Buy a Business?
06:40 - Who's Involved in the M&A Process?
06:42 - Investment Brokers and Investment Bankers
09:23 - CorporateLawyers
10:47 - Bu...

Review: Private Equity, Direct Investing, Fund Investing, Co-investing and Secondary Investing
Investors can invest in private equity in four different ways:
Directly, funds, co-investments and secondaries.
Direct investing is when an investor directly invests in private companies. It could be buying the entire company or a minority investment.
Fund investing is when an investor goes to a private equity fund and the private equity fund buys companies on the investor’s behalf.
Co-investing is the most complicated option. For example, an investor invests $50 million in a private equity fund with co-investment rights, meaning that when the fund looks for opportunities it can allow the investor to participate not only through the fund, but directly as well.
An example of this would be w...

Hedge FundStrategy: Mergers & Takeovers Arbitrage. http://www.financial-spread-betting.com/Spread-trading-faqs.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Hedge funds trading strategies - hedge funds will implement specific strategies and bolt them into each individual fund they have and one of the things they do is merger arbitrage. Merger Arbitrage Strategy Explained. This is basically trading in companies involved in pending mergers/acquisitions
The way I understand it is that when a company X bids to acquire another company Y the price of x will typically trade at a discount to the offered price because it is not certain that the deal will go thru. A hedge fund will calculate their risk:reward and may decide to buy company X because they believe there is a high chance of the bid succeeding. Very occasionally it will open at a higher price than the offered price and this is because the market believe that the initial bid will be refused and company Y will then offer a higher price offer.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund Merger Arbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

Hedge FundStrategy: Mergers & Takeovers Arbitrage. http://www.financial-spread-betting.com/Spread-trading-faqs.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Hedge funds trading strategies - hedge funds will implement specific strategies and bolt them into each individual fund they have and one of the things they do is merger arbitrage. Merger Arbitrage Strategy Explained. This is basically trading in companies involved in pending mergers/acquisitions
The way I understand it is that when a company X bids to acquire another company Y the price of x will typically trade at a discount to the offered price because it is not certain that the deal will go thru. A hedge fund will calculate their risk:reward and may decide to buy company X because they believe there is a high chance of the bid succeeding. Very occasionally it will open at a higher price than the offered price and this is because the market believe that the initial bid will be refused and company Y will then offer a higher price offer.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund Merger Arbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

Raising bank finance to fund acquisitions

Michael describes how Morgan Cradock helped two clients to raise capital. The first being ATSA that tripled group revenues with an acquisition and bank finance....

Michael describes how Morgan Cradock helped two clients to raise capital. The first being ATSA that tripled group revenues with an acquisition and bank finance. The second being GPVProperty that secured $1.5m in equity capital in 30 days.

Michael describes how Morgan Cradock helped two clients to raise capital. The first being ATSA that tripled group revenues with an acquisition and bank finance. The second being GPVProperty that secured $1.5m in equity capital in 30 days.

The mechanics of a simple leveraged buy-out. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/sto...

The mechanics of a simple leveraged buy-out. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/corporate-debt-versus-traditional-mortgages?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/simple-merger-arb-with-share-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Private equity firms often borrow money (use leverage) to buy companies. This tutorial explains how they do it and pay the debt.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

The mechanics of a simple leveraged buy-out. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/corporate-debt-versus-traditional-mortgages?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/simple-merger-arb-with-share-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Private equity firms often borrow money (use leverage) to buy companies. This tutorial explains how they do it and pay the debt.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Porta Communications CEO would not consider placing to fund acquisitions at current share price

“Until we can get a share price that recognises what we’re doing and how we’re outperforming the market, I do not see it as an opportunity of raising equity in ...

“Until we can get a share price that recognises what we’re doing and how we’re outperforming the market, I do not see it as an opportunity of raising equity in the market.” Those are the comments of David Wright, the chief executive of PortaCommunications (LON:PTCM), who says that while there are acquisition targets out there, the PR and communications group “would have to be a bit more creative how we get our money”.

“Until we can get a share price that recognises what we’re doing and how we’re outperforming the market, I do not see it as an opportunity of raising equity in the market.” Those are the comments of David Wright, the chief executive of PortaCommunications (LON:PTCM), who says that while there are acquisition targets out there, the PR and communications group “would have to be a bit more creative how we get our money”.

Understanding Private Equity Buyers in Mergers and Acquisitions

#mergers #corporatelaw #businesslaw
http://cenkuslaw.com
http://braatenwoods.com
In the Main Street to lower-middle market ($1 million - $25 million), we often...

#mergers #corporatelaw #businesslaw
http://cenkuslaw.com
http://braatenwoods.com
In the Main Street to lower-middle market ($1 million - $25 million), we often deal with three different types of buyers. Each buyer has their own motivations, ways of doing business, and characteristics you should consider when dealing with them while selling your business. So, we're going to cover each of these three types of buyers in the is three-part (go figure) series.
In this video, I'll introduce you to the mind of the financial - or private equity - buyer. Private equity investors generally work with a large pool of money and may be working to collect and merge a sum of small businesses in your industry.
If you're dealing with a private equity firm looking to buy your business, know that you're dealing with a seasoned buyer. As I touch on in the video, this is both a benefit and a factor you should give some consideration.
As always, watch the video and feel free to reach out with any questions. Leave a comment or contact me.
_____________________________________________
For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
https://twitter.com/BCenkus
http://www.cenkuslaw.com
http://www.cenkus.com
_______________________________________________
About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders' agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as ChiefLegal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built ParagonResidentialMortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

#mergers #corporatelaw #businesslaw
http://cenkuslaw.com
http://braatenwoods.com
In the Main Street to lower-middle market ($1 million - $25 million), we often deal with three different types of buyers. Each buyer has their own motivations, ways of doing business, and characteristics you should consider when dealing with them while selling your business. So, we're going to cover each of these three types of buyers in the is three-part (go figure) series.
In this video, I'll introduce you to the mind of the financial - or private equity - buyer. Private equity investors generally work with a large pool of money and may be working to collect and merge a sum of small businesses in your industry.
If you're dealing with a private equity firm looking to buy your business, know that you're dealing with a seasoned buyer. As I touch on in the video, this is both a benefit and a factor you should give some consideration.
As always, watch the video and feel free to reach out with any questions. Leave a comment or contact me.
_____________________________________________
For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
https://twitter.com/BCenkus
http://www.cenkuslaw.com
http://www.cenkus.com
_______________________________________________
About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders' agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as ChiefLegal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built ParagonResidentialMortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

Mechanics of a share-based acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-an...

Mechanics of a share-based acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/price-behavior-after-announced-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/dilution-tutorial/v/stock-dilution?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Companies often buy or merge with other companies using shares (which is sometimes less intuitive than when they use cash). This tutorial walks through the mechanics of how this happens and details what is likely to happen in the public markets because of the transaction (including opportunities for arbitrage).
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Mechanics of a share-based acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/price-behavior-after-announced-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/dilution-tutorial/v/stock-dilution?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Companies often buy or merge with other companies using shares (which is sometimes less intuitive than when they use cash). This tutorial walks through the mechanics of how this happens and details what is likely to happen in the public markets because of the transaction (including opportunities for arbitrage).
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Merger Model: Cash, Debt, and Stock Mix

In this merger model lesson, you'll learn how a company might decide what mix of cash, debt, and stock it might use to fund...
By http://breakingintowallstreet....

In this merger model lesson, you'll learn how a company might decide what mix of cash, debt, and stock it might use to fund...
By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
... might use to fund a merger or an acquisition - and you'll understand how to determine the appropriate amount of each one in a deal.
2:24 General Order of Funding for M&A Deals
4:49 Cash - How Much Can You Use?
9:56 Debt - How Much Can You Use?
14:08 Stock - How Much Can You Use?
16:32 Exceptions
18:03 Recap and Summary
How Do You Determine the Cash / Stock / Debt Mix in an M&A Deal?
Very common interview question, and you also need to know it for what you do on the job.
3 ways to fund a company, and to fund acquisitions of other companies: use cash on-hand, borrow the money from other entities (debt), or issue equity (stock) to new investors.
But how does a buyer in an M&A deal decide whether it should use…
50% debt and 50% stock vs.
33% debt, 33% stock, and 33% cash vs.
50% cash and 50% debt vs….
And the list goes on.
Easiest: Think about the "cost" of each method, start with the cheapest method, use the most of THAT method that you can, and then move to the next cheapest method, and continue like that.
GENERALLY:
Cheapest: Cash, since interest rates on cash are lower than interest rates on debt, and tend to be low in general.
Next Cheapest: Debt, since it is still cheaper than equity and since interest paid on debt is tax-deductible.
Most Expensive: Stock, since the Cost of Equity tends to exceed the Cost of Debt… in theory and in practice.
To Compare Them: Look at the "After-Tax Yields"… for debt and cash, just take the Interest Rate and multiply by (1 - Buyer's Tax Rate).
Stock: Take the buyer's Net Income and divide by its Equity Value (or "flip" its P / E multiple).
SO: Always start with cash, use the most you can, then move to debt, use the most you can, and finish up with stock.
Cash - How Much is "The MostYou Can?"
Easy: Company has minimal cash and can't use anything, or it has a huge cash balance and can use all of it.
More CommonCase: Look at the company's "minimum" cash balance and use the excess cash above that to fund the deal.
EX: Company has $500 million in cash right now, but its minimum cash balance to keep operating is $200 million…
So it can use $300 million of its cash to fund the deal.
How to Determine: Can be tough, but sometimes companies disclose it…
...or you can look back at historical cash balances and make a guesstimate based on that (what was its lowest cash balance in past years?).
Debt - How Much Can You Use?
So let's say you've now used $300 million of cash to fund the deal… but it's a deal for $1 billion total.
How much debt can you use to fund the remainder? $700 million? $300 million? $500 million?
Easiest Method: Calculate the key credit stats and ratios for the combined company - for example:
Total Debt / EBITDA
Net Debt / EBITDA
EBITDA / Interest Expense
And see what amount of debt makes these look "reasonable", in line with historical figures and also figures for comparable companies.
EX: Let's say that if the company uses $500 million of debt, its Debt / EBITDA is 4x.
Historically, it has been around 2-3x, and no peer company is levered at more than 3.5x.
If that's the case, we'd say that 3.5x - 4.0x is probably the "maximum" (whatever amount of debt that means).
Here: We have the Debt / EBITDA and other ratios for the Men's Wearhouse / Jos. A. Bank peer companies.
Stock - Now What?
Often used as the "method of last resort" because:
A) It tends to be the most expensive method for most companies.
B) Most acquirers don't like giving up ownership and diluting existing shareholders unless absolutely necessary.
So in this example, if we've used $300 million of cash and $500 million of debt, we're still not quite at $1 billion... need an extra $200 million, which we can get by issuing stock.
# of Shares = $200 million / Buyer's Share Price.
Technically, there's no real "limit," but it would be very odd for a company to give up more than, say, 50% ownership to another company… unless they're very close in size.
Exceptions:
Buyer has an exceptionally high P / E multiple (Amazon) - stock might be the cheapest!
Buyer wants to do a tax-free deal (Google / YouTube) and it's much bigger anyway, so won't make a difference.
Companies are similarly sized - stock might always be necessary because cash/debt are implausible (mergers of equals).
Summary
Which purchase method do you use?
MOST relevant when companies are closer in size… doesn't make much difference when the buyer is 100x or 1000x bigger than the seller.
Order:
1. Cash - Any excess cash above the company's minimum cash balance.
2. Debt - To the upper range of the Debt / EBITDA of comparables (and other metrics).
3. Stock - For any remaining funding that's required; ideally give up well under 50% ownership.

In this merger model lesson, you'll learn how a company might decide what mix of cash, debt, and stock it might use to fund...
By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
... might use to fund a merger or an acquisition - and you'll understand how to determine the appropriate amount of each one in a deal.
2:24 General Order of Funding for M&A Deals
4:49 Cash - How Much Can You Use?
9:56 Debt - How Much Can You Use?
14:08 Stock - How Much Can You Use?
16:32 Exceptions
18:03 Recap and Summary
How Do You Determine the Cash / Stock / Debt Mix in an M&A Deal?
Very common interview question, and you also need to know it for what you do on the job.
3 ways to fund a company, and to fund acquisitions of other companies: use cash on-hand, borrow the money from other entities (debt), or issue equity (stock) to new investors.
But how does a buyer in an M&A deal decide whether it should use…
50% debt and 50% stock vs.
33% debt, 33% stock, and 33% cash vs.
50% cash and 50% debt vs….
And the list goes on.
Easiest: Think about the "cost" of each method, start with the cheapest method, use the most of THAT method that you can, and then move to the next cheapest method, and continue like that.
GENERALLY:
Cheapest: Cash, since interest rates on cash are lower than interest rates on debt, and tend to be low in general.
Next Cheapest: Debt, since it is still cheaper than equity and since interest paid on debt is tax-deductible.
Most Expensive: Stock, since the Cost of Equity tends to exceed the Cost of Debt… in theory and in practice.
To Compare Them: Look at the "After-Tax Yields"… for debt and cash, just take the Interest Rate and multiply by (1 - Buyer's Tax Rate).
Stock: Take the buyer's Net Income and divide by its Equity Value (or "flip" its P / E multiple).
SO: Always start with cash, use the most you can, then move to debt, use the most you can, and finish up with stock.
Cash - How Much is "The MostYou Can?"
Easy: Company has minimal cash and can't use anything, or it has a huge cash balance and can use all of it.
More CommonCase: Look at the company's "minimum" cash balance and use the excess cash above that to fund the deal.
EX: Company has $500 million in cash right now, but its minimum cash balance to keep operating is $200 million…
So it can use $300 million of its cash to fund the deal.
How to Determine: Can be tough, but sometimes companies disclose it…
...or you can look back at historical cash balances and make a guesstimate based on that (what was its lowest cash balance in past years?).
Debt - How Much Can You Use?
So let's say you've now used $300 million of cash to fund the deal… but it's a deal for $1 billion total.
How much debt can you use to fund the remainder? $700 million? $300 million? $500 million?
Easiest Method: Calculate the key credit stats and ratios for the combined company - for example:
Total Debt / EBITDA
Net Debt / EBITDA
EBITDA / Interest Expense
And see what amount of debt makes these look "reasonable", in line with historical figures and also figures for comparable companies.
EX: Let's say that if the company uses $500 million of debt, its Debt / EBITDA is 4x.
Historically, it has been around 2-3x, and no peer company is levered at more than 3.5x.
If that's the case, we'd say that 3.5x - 4.0x is probably the "maximum" (whatever amount of debt that means).
Here: We have the Debt / EBITDA and other ratios for the Men's Wearhouse / Jos. A. Bank peer companies.
Stock - Now What?
Often used as the "method of last resort" because:
A) It tends to be the most expensive method for most companies.
B) Most acquirers don't like giving up ownership and diluting existing shareholders unless absolutely necessary.
So in this example, if we've used $300 million of cash and $500 million of debt, we're still not quite at $1 billion... need an extra $200 million, which we can get by issuing stock.
# of Shares = $200 million / Buyer's Share Price.
Technically, there's no real "limit," but it would be very odd for a company to give up more than, say, 50% ownership to another company… unless they're very close in size.
Exceptions:
Buyer has an exceptionally high P / E multiple (Amazon) - stock might be the cheapest!
Buyer wants to do a tax-free deal (Google / YouTube) and it's much bigger anyway, so won't make a difference.
Companies are similarly sized - stock might always be necessary because cash/debt are implausible (mergers of equals).
Summary
Which purchase method do you use?
MOST relevant when companies are closer in size… doesn't make much difference when the buyer is 100x or 1000x bigger than the seller.
Order:
1. Cash - Any excess cash above the company's minimum cash balance.
2. Debt - To the upper range of the Debt / EBITDA of comparables (and other metrics).
3. Stock - For any remaining funding that's required; ideally give up well under 50% ownership.

Simple case of merger arbitrage when there is an all cash acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finan...

Simple case of merger arbitrage when there is an all cash acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/investment-consumption/v/risk-and-reward-introduction?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/hedge-funds/v/hedge-fund-strategies-long-short-2?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Hedge funds have absolutely nothing to do with shrubbery. Their name comes from the fact that early hedge funds (and some current ones) tried to "hedge" their exposure to the market (so they could, in theory, do well in an "up" or "down" market as long as they were good at picking the good companies). Today, hedge funds represent a huge class investment funds. They are far less regulated than, say, mutual funds. In exchange for this, they aren't allowed to market or take investments from "unsophisticated" investors. Some use their flexibility to mitigate risk, other use it to amplify it.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Simple case of merger arbitrage when there is an all cash acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/investment-consumption/v/risk-and-reward-introduction?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/hedge-funds/v/hedge-fund-strategies-long-short-2?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Hedge funds have absolutely nothing to do with shrubbery. Their name comes from the fact that early hedge funds (and some current ones) tried to "hedge" their exposure to the market (so they could, in theory, do well in an "up" or "down" market as long as they were good at picking the good companies). Today, hedge funds represent a huge class investment funds. They are far less regulated than, say, mutual funds. In exchange for this, they aren't allowed to market or take investments from "unsophisticated" investors. Some use their flexibility to mitigate risk, other use it to amplify it.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Hedge Funds versus Mutual Funds. http://www.financial-spread-betting.com/course/technical-analysis.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! What is the difference between traditional funds and hedge funds? Are these the same or different? Both hedge funds and mutual funds are managed by a portfolio fund manager.
Hedge funds are managed actively by a hedge fund manager who will decide where to allocate capital and different trading ideas. A hedge fund can go long or short - they have multiple different ways to express an idea so they have more flexibility. You can't really put a very small amount with a hedge fund - there are barriers to entry. Performance remuneration is very much performance based - typically 2% management fee, 20% performance fee. Some of these hedge funds are quite high risk...Mutual funds are much more geared towards picking assets that will increase in value in the long term. Mutual funds are very regulated and limited to what they can charge and the fee structure is made very clear.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund MergerArbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

Hedge Funds versus Mutual Funds. http://www.financial-spread-betting.com/course/technical-analysis.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! What is the difference between traditional funds and hedge funds? Are these the same or different? Both hedge funds and mutual funds are managed by a portfolio fund manager.
Hedge funds are managed actively by a hedge fund manager who will decide where to allocate capital and different trading ideas. A hedge fund can go long or short - they have multiple different ways to express an idea so they have more flexibility. You can't really put a very small amount with a hedge fund - there are barriers to entry. Performance remuneration is very much performance based - typically 2% management fee, 20% performance fee. Some of these hedge funds are quite high risk...Mutual funds are much more geared towards picking assets that will increase in value in the long term. Mutual funds are very regulated and limited to what they can charge and the fee structure is made very clear.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund MergerArbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

Mergers and Acquisitions Explained: A Crash Course on M&A

http://cenkuslaw.com
Mergers & Acquisitions (commonly referred to as M&A) is often considered a fast-paced, exciting niche of corporate law. And, it is. I love...

http://cenkuslaw.com
Mergers & Acquisitions (commonly referred to as M&A) is often considered a fast-paced, exciting niche of corporate law. And, it is. I love the work I do and my role in M&A deals. So, this video addresses a lot of common questions regarding M&A.
We'll take a look at what M&A is, types of deal structures, the key players, the motivations for performing a merger or acquisition, and what deals looks like at different levels of the market.
Here's a quick rundown in case you want to jump ahead:
0:44 - What is M&A generally
01:04 - Asset Sales, Stock Sales and Mergers
04:28 - Why do Sellers Sell a Business?
05:19 - Why do Buyers Buy a Business?
06:40 - Who's Involved in the M&A Process?
06:42 - Investment Brokers and Investment Bankers
09:23 - CorporateLawyers
10:47 - Business Appraisers, Accountants & Consultants
So, take a look and let me know what you think!
_____________________________________________
For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
https://twitter.com/BCenkus
http://www.cenkuslaw.com
http://www.cenkus.com
_______________________________________________
About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders' agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as ChiefLegal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built ParagonResidentialMortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

http://cenkuslaw.com
Mergers & Acquisitions (commonly referred to as M&A) is often considered a fast-paced, exciting niche of corporate law. And, it is. I love the work I do and my role in M&A deals. So, this video addresses a lot of common questions regarding M&A.
We'll take a look at what M&A is, types of deal structures, the key players, the motivations for performing a merger or acquisition, and what deals looks like at different levels of the market.
Here's a quick rundown in case you want to jump ahead:
0:44 - What is M&A generally
01:04 - Asset Sales, Stock Sales and Mergers
04:28 - Why do Sellers Sell a Business?
05:19 - Why do Buyers Buy a Business?
06:40 - Who's Involved in the M&A Process?
06:42 - Investment Brokers and Investment Bankers
09:23 - CorporateLawyers
10:47 - Business Appraisers, Accountants & Consultants
So, take a look and let me know what you think!
_____________________________________________
For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
https://twitter.com/BCenkus
http://www.cenkuslaw.com
http://www.cenkus.com
_______________________________________________
About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders' agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as ChiefLegal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built ParagonResidentialMortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

Review: Private Equity, Direct Investing, Fund Investing, Co-investing and Secondary Investing
Investors can invest in private equity in four different ways:
Directly, funds, co-investments and secondaries.
Direct investing is when an investor directly invests in private companies. It could be buying the entire company or a minority investment.
Fund investing is when an investor goes to a private equity fund and the private equity fund buys companies on the investor’s behalf.
Co-investing is the most complicated option. For example, an investor invests $50 million in a private equity fund with co-investment rights, meaning that when the fund looks for opportunities it can allow the investor to participate not only through the fund, but directly as well.
An example of this would be when a fund is looking at investment in a $40 million company. That investment needs $30 million equity and $10 million in debt. The equity portion given by the fund (without co-investing) would be $30 million dollars. In the case of co-investing, the fund gives $20 million (in which the investor is participating through the fund) with the remaining $10 million (i.e. The difference between the $20 million in equity given by the fund and the $30 million equity needed) is offered to the investor to do on a direct basis resulting in the fund investing $20 million and the investor investing $10 million.
When investors invest into a fund, they pay full fees, typically paying a 2% management fee and a 20% performance fee (i.e. “two and twenty”). By investing $10 million directly, other than a small deal origination fee, investors are able to reduce their overall fees. (For more on fees see Video #4).
The fourth way to invest in private equity is through secondaries. In this example our investor makes a commitment to invest $50 million in a private equity fund by giving about $10 to $20 million dollars to the private equity fund up front for the first two fund investments. As more acquisitions are made, the private equity fund makes capital calls to the investor. The investor is usually locked into the private equity fund for seven to ten years (or longer). If the investor wants out of this agreement, the commitment can be sold to other investors. The sale can be of the entire commitment (which would include the existing deals that the private equity fund was already made, plus future capital calls) or it can be done through a structured secondary (selling different parts) where the investor may want to keep the existing investments and just sell the future commitments. As easy as an investor can sell a secondary, it can buy one as well.

Review: Private Equity, Direct Investing, Fund Investing, Co-investing and Secondary Investing
Investors can invest in private equity in four different ways:
Directly, funds, co-investments and secondaries.
Direct investing is when an investor directly invests in private companies. It could be buying the entire company or a minority investment.
Fund investing is when an investor goes to a private equity fund and the private equity fund buys companies on the investor’s behalf.
Co-investing is the most complicated option. For example, an investor invests $50 million in a private equity fund with co-investment rights, meaning that when the fund looks for opportunities it can allow the investor to participate not only through the fund, but directly as well.
An example of this would be when a fund is looking at investment in a $40 million company. That investment needs $30 million equity and $10 million in debt. The equity portion given by the fund (without co-investing) would be $30 million dollars. In the case of co-investing, the fund gives $20 million (in which the investor is participating through the fund) with the remaining $10 million (i.e. The difference between the $20 million in equity given by the fund and the $30 million equity needed) is offered to the investor to do on a direct basis resulting in the fund investing $20 million and the investor investing $10 million.
When investors invest into a fund, they pay full fees, typically paying a 2% management fee and a 20% performance fee (i.e. “two and twenty”). By investing $10 million directly, other than a small deal origination fee, investors are able to reduce their overall fees. (For more on fees see Video #4).
The fourth way to invest in private equity is through secondaries. In this example our investor makes a commitment to invest $50 million in a private equity fund by giving about $10 to $20 million dollars to the private equity fund up front for the first two fund investments. As more acquisitions are made, the private equity fund makes capital calls to the investor. The investor is usually locked into the private equity fund for seven to ten years (or longer). If the investor wants out of this agreement, the commitment can be sold to other investors. The sale can be of the entire commitment (which would include the existing deals that the private equity fund was already made, plus future capital calls) or it can be done through a structured secondary (selling different parts) where the investor may want to keep the existing investments and just sell the future commitments. As easy as an investor can sell a secondary, it can buy one as well.

Hedge FundStrategy: Mergers & Takeovers Arbitrage. http://www.financial-spread-betting.com/Spread-trading-faqs.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Hedge funds trading strategies - hedge funds will implement specific strategies and bolt them into each individual fund they have and one of the things they do is merger arbitrage. Merger Arbitrage Strategy Explained. This is basically trading in companies involved in pending mergers/acquisitions
The way I understand it is that when a company X bids to acquire another company Y the price of x will typically trade at a discount to the offered price because it is not certain that the deal will go thru. A hedge fund will calculate their risk:reward and may decide to buy company X because they believe there is a high chance of the bid succeeding. Very occasionally it will open at a higher price than the offered price and this is because the market believe that the initial bid will be refused and company Y will then offer a higher price offer.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund Merger Arbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

Raising bank finance to fund acquisitions

Michael describes how Morgan Cradock helped two clients to raise capital. The first being ATSA that tripled group revenues with an acquisition and bank finance. The second being GPVProperty that secured $1.5m in equity capital in 30 days.

The mechanics of a simple leveraged buy-out. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/bonds-tutorial/v/corporate-debt-versus-traditional-mortgages?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/simple-merger-arb-with-share-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Private equity firms often borrow money (use leverage) to buy companies. This tutorial explains how they do it and pay the debt.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Porta Communications CEO would not consider placing to fund acquisitions at current share price

“Until we can get a share price that recognises what we’re doing and how we’re outperforming the market, I do not see it as an opportunity of raising equity in the market.” Those are the comments of David Wright, the chief executive of PortaCommunications (LON:PTCM), who says that while there are acquisition targets out there, the PR and communications group “would have to be a bit more creative how we get our money”.

Understanding Private Equity Buyers in Mergers and Acquisitions

#mergers #corporatelaw #businesslaw
http://cenkuslaw.com
http://braatenwoods.com
In the Main Street to lower-middle market ($1 million - $25 million), we often deal with three different types of buyers. Each buyer has their own motivations, ways of doing business, and characteristics you should consider when dealing with them while selling your business. So, we're going to cover each of these three types of buyers in the is three-part (go figure) series.
In this video, I'll introduce you to the mind of the financial - or private equity - buyer. Private equity investors generally work with a large pool of money and may be working to collect and merge a sum of small businesses in your industry.
If you're dealing with a private equity firm looking to buy your business, know that you're dealing with a seasoned buyer. As I touch on in the video, this is both a benefit and a factor you should give some consideration.
As always, watch the video and feel free to reach out with any questions. Leave a comment or contact me.
_____________________________________________
For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
https://twitter.com/BCenkus
http://www.cenkuslaw.com
http://www.cenkus.com
_______________________________________________
About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders' agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as ChiefLegal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built ParagonResidentialMortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

Mechanics of a share-based acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/mergers-acquisitions/v/price-behavior-after-announced-acquisition?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/dilution-tutorial/v/stock-dilution?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Companies often buy or merge with other companies using shares (which is sometimes less intuitive than when they use cash). This tutorial walks through the mechanics of how this happens and details what is likely to happen in the public markets because of the transaction (including opportunities for arbitrage).
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Merger Model: Cash, Debt, and Stock Mix

In this merger model lesson, you'll learn how a company might decide what mix of cash, debt, and stock it might use to fund...
By http://breakingintowallstreet.com/ "Financial Modeling Training And Career Resources For Aspiring Investment Bankers"
... might use to fund a merger or an acquisition - and you'll understand how to determine the appropriate amount of each one in a deal.
2:24 General Order of Funding for M&A Deals
4:49 Cash - How Much Can You Use?
9:56 Debt - How Much Can You Use?
14:08 Stock - How Much Can You Use?
16:32 Exceptions
18:03 Recap and Summary
How Do You Determine the Cash / Stock / Debt Mix in an M&A Deal?
Very common interview question, and you also need to know it for what you do on the job.
3 ways to fund a company, and to fund acquisitions of other companies: use cash on-hand, borrow the money from other entities (debt), or issue equity (stock) to new investors.
But how does a buyer in an M&A deal decide whether it should use…
50% debt and 50% stock vs.
33% debt, 33% stock, and 33% cash vs.
50% cash and 50% debt vs….
And the list goes on.
Easiest: Think about the "cost" of each method, start with the cheapest method, use the most of THAT method that you can, and then move to the next cheapest method, and continue like that.
GENERALLY:
Cheapest: Cash, since interest rates on cash are lower than interest rates on debt, and tend to be low in general.
Next Cheapest: Debt, since it is still cheaper than equity and since interest paid on debt is tax-deductible.
Most Expensive: Stock, since the Cost of Equity tends to exceed the Cost of Debt… in theory and in practice.
To Compare Them: Look at the "After-Tax Yields"… for debt and cash, just take the Interest Rate and multiply by (1 - Buyer's Tax Rate).
Stock: Take the buyer's Net Income and divide by its Equity Value (or "flip" its P / E multiple).
SO: Always start with cash, use the most you can, then move to debt, use the most you can, and finish up with stock.
Cash - How Much is "The MostYou Can?"
Easy: Company has minimal cash and can't use anything, or it has a huge cash balance and can use all of it.
More CommonCase: Look at the company's "minimum" cash balance and use the excess cash above that to fund the deal.
EX: Company has $500 million in cash right now, but its minimum cash balance to keep operating is $200 million…
So it can use $300 million of its cash to fund the deal.
How to Determine: Can be tough, but sometimes companies disclose it…
...or you can look back at historical cash balances and make a guesstimate based on that (what was its lowest cash balance in past years?).
Debt - How Much Can You Use?
So let's say you've now used $300 million of cash to fund the deal… but it's a deal for $1 billion total.
How much debt can you use to fund the remainder? $700 million? $300 million? $500 million?
Easiest Method: Calculate the key credit stats and ratios for the combined company - for example:
Total Debt / EBITDA
Net Debt / EBITDA
EBITDA / Interest Expense
And see what amount of debt makes these look "reasonable", in line with historical figures and also figures for comparable companies.
EX: Let's say that if the company uses $500 million of debt, its Debt / EBITDA is 4x.
Historically, it has been around 2-3x, and no peer company is levered at more than 3.5x.
If that's the case, we'd say that 3.5x - 4.0x is probably the "maximum" (whatever amount of debt that means).
Here: We have the Debt / EBITDA and other ratios for the Men's Wearhouse / Jos. A. Bank peer companies.
Stock - Now What?
Often used as the "method of last resort" because:
A) It tends to be the most expensive method for most companies.
B) Most acquirers don't like giving up ownership and diluting existing shareholders unless absolutely necessary.
So in this example, if we've used $300 million of cash and $500 million of debt, we're still not quite at $1 billion... need an extra $200 million, which we can get by issuing stock.
# of Shares = $200 million / Buyer's Share Price.
Technically, there's no real "limit," but it would be very odd for a company to give up more than, say, 50% ownership to another company… unless they're very close in size.
Exceptions:
Buyer has an exceptionally high P / E multiple (Amazon) - stock might be the cheapest!
Buyer wants to do a tax-free deal (Google / YouTube) and it's much bigger anyway, so won't make a difference.
Companies are similarly sized - stock might always be necessary because cash/debt are implausible (mergers of equals).
Summary
Which purchase method do you use?
MOST relevant when companies are closer in size… doesn't make much difference when the buyer is 100x or 1000x bigger than the seller.
Order:
1. Cash - Any excess cash above the company's minimum cash balance.
2. Debt - To the upper range of the Debt / EBITDA of comparables (and other metrics).
3. Stock - For any remaining funding that's required; ideally give up well under 50% ownership.

Simple case of merger arbitrage when there is an all cash acquisition. Created by Sal Khan.
Watch the next lesson:
https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/investment-consumption/v/risk-and-reward-introduction?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/investment-vehicles-tutorial/hedge-funds/v/hedge-fund-strategies-long-short-2?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets
Finance and capital markets on Khan Academy: Hedge funds have absolutely nothing to do with shrubbery. Their name comes from the fact that early hedge funds (and some current ones) tried to "hedge" their exposure to the market (so they could, in theory, do well in an "up" or "down" market as long as they were good at picking the good companies). Today, hedge funds represent a huge class investment funds. They are far less regulated than, say, mutual funds. In exchange for this, they aren't allowed to market or take investments from "unsophisticated" investors. Some use their flexibility to mitigate risk, other use it to amplify it.
About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content.
For free. For everyone. Forever. #YouCanLearnAnything
Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1
Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Hedge Funds versus Mutual Funds. http://www.financial-spread-betting.com/course/technical-analysis.html PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! What is the difference between traditional funds and hedge funds? Are these the same or different? Both hedge funds and mutual funds are managed by a portfolio fund manager.
Hedge funds are managed actively by a hedge fund manager who will decide where to allocate capital and different trading ideas. A hedge fund can go long or short - they have multiple different ways to express an idea so they have more flexibility. You can't really put a very small amount with a hedge fund - there are barriers to entry. Performance remuneration is very much performance based - typically 2% management fee, 20% performance fee. Some of these hedge funds are quite high risk...Mutual funds are much more geared towards picking assets that will increase in value in the long term. Mutual funds are very regulated and limited to what they can charge and the fee structure is made very clear.
Related Videos
Hedge Fund Strategies Series (3 Parts)
Hedge Fund Strategies, Short Only Hedge Fund Strategy - How Hedge Funds Invest Capital Part 1 🙋
https://www.youtube.com/watch?v=xiTKiVKcL3g
Long/Short Equity Hedge Fund Strategy - 130/30 Strategy Explained Part 2 🙋
https://www.youtube.com/watch?v=ElGNbOUxjpQ
Hedge Fund MergerArbitrage Strategy - Speculating on Pending Mergers/AcquisitionsPart 3 🙋
https://www.youtube.com/watch?v=zgYEHB93ri4
What is the 130 30 Investment Strategy? ➡️
https://www.youtube.com/watch?v=LrAgQ53Kw0Q
Hedge Funds vs Mutual Funds - Difference between Traditional Funds and Hedge Funds 🙋
https://www.youtube.com/watch?v=mtAS5Y7jjD4
Top 10 Biggest Trading Losses in History: Famous Trading Blowups! 😲
https://www.youtube.com/watch?v=OPJ73r9NR60

Mergers and Acquisitions Explained: A Crash Course on M&A

http://cenkuslaw.com
Mergers & Acquisitions (commonly referred to as M&A) is often considered a fast-paced, exciting niche of corporate law. And, it is. I love the work I do and my role in M&A deals. So, this video addresses a lot of common questions regarding M&A.
We'll take a look at what M&A is, types of deal structures, the key players, the motivations for performing a merger or acquisition, and what deals looks like at different levels of the market.
Here's a quick rundown in case you want to jump ahead:
0:44 - What is M&A generally
01:04 - Asset Sales, Stock Sales and Mergers
04:28 - Why do Sellers Sell a Business?
05:19 - Why do Buyers Buy a Business?
06:40 - Who's Involved in the M&A Process?
06:42 - Investment Brokers and Investment Bankers
09:23 - CorporateLawyers
10:47 - Business Appraisers, Accountants & Consultants
So, take a look and let me know what you think!
_____________________________________________
For a deeper dive into and other legal issues vital to the success of your deals and your business, visit me at:
http://www.cenkuslaw.com
Just starting up? Check this out for my advice on startup success: http://www.thestartupshepherd.com.
You can also reach me at:
https://www.linkedin.com/in/brettcenkus
https://twitter.com/BCenkus
http://www.cenkuslaw.com
http://www.cenkus.com
_______________________________________________
About me:
My 20+ years of experience in business finance, business law and entrepreneurship have led me to believe that numbers and logic are awesome tools, but understanding human nature and emotions is the first step to business success.
The Cenkus Law Firm provides services related to mergers & acquisitions, general business issues and startups, including founders' agreements and fundraising. I also consult with entrepreneurs and have invested my own capital as an angel investor.
From 2010-2013 I served as ChiefLegal Counsel of a publicly-trade international oilfield services company. From 2001 to 2006 me and a partner founded and built ParagonResidentialMortgage. Paragon was sold to Bridge Investments in 2006.
I hold a Juris Doctorate from Harvard Law School and a Bachelor of Arts degree in Economics from Messiah College in Grantham, Pennsylvania.
Now, I live in Austin, TX with my wife and two kids. I enjoy reading, running, classic movies, great food and wine and some great American football.

Review: Private Equity, Direct Investing, Fund Investing, Co-investing and Secondary Investing
Investors can invest in private equity in four different ways:
Directly, funds, co-investments and secondaries.
Direct investing is when an investor directly invests in private companies. It could be buying the entire company or a minority investment.
Fund investing is when an investor goes to a private equity fund and the private equity fund buys companies on the investor’s behalf.
Co-investing is the most complicated option. For example, an investor invests $50 million in a private equity fund with co-investment rights, meaning that when the fund looks for opportunities it can allow the investor to participate not only through the fund, but directly as well.
An example of this would be when a fund is looking at investment in a $40 million company. That investment needs $30 million equity and $10 million in debt. The equity portion given by the fund (without co-investing) would be $30 million dollars. In the case of co-investing, the fund gives $20 million (in which the investor is participating through the fund) with the remaining $10 million (i.e. The difference between the $20 million in equity given by the fund and the $30 million equity needed) is offered to the investor to do on a direct basis resulting in the fund investing $20 million and the investor investing $10 million.
When investors invest into a fund, they pay full fees, typically paying a 2% management fee and a 20% performance fee (i.e. “two and twenty”). By investing $10 million directly, other than a small deal origination fee, investors are able to reduce their overall fees. (For more on fees see Video #4).
The fourth way to invest in private equity is through secondaries. In this example our investor makes a commitment to invest $50 million in a private equity fund by giving about $10 to $20 million dollars to the private equity fund up front for the first two fund investments. As more acquisitions are made, the private equity fund makes capital calls to the investor. The investor is usually locked into the private equity fund for seven to ten years (or longer). If the investor wants out of this agreement, the commitment can be sold to other investors. The sale can be of the entire commitment (which would include the existing deals that the private equity fund was already made, plus future capital calls) or it can be done through a structured secondary (selling different parts) where the investor may want to keep the existing investments and just sell the future commitments. As easy as an investor can sell a secondary, it can buy one as well.

Khan Academy

Khan Academy is a non-profit educational organization created in 2006 by educator Salman Khan with the aim of providing a free, world-class education for anyone, anywhere. The organization produces short lectures in the form of YouTube videos. In addition to micro lectures, the organization's website features practice exercises and tools for educators. All resources are available for free to anyone around the world. The main language of the website is English, but the content is also available in other languages.

In late 2004, Khan began tutoring his cousin Nadia who needed help with math using Yahoo!'s Doodle notepad.When other relatives and friends sought similar help, he decided that it would be more practical to distribute the tutorials on YouTube. The videos' popularity and the testimonials of appreciative students prompted Khan to quit his job in finance as a hedge fund analyst at Connective Capital Management in 2009, and focus on the tutorials (then released under the moniker "Khan Academy") full-time.

... third institutional fund ... To date, OpenGate Capital, through its legacy and fund investments, has executed more than 30 acquisitions including corporate carve-outs, management buy-outs, special situations and transactions with private sellers across North America and Europe....

The Company intends to use the net proceeds from the offering of senior notes, together with the net proceeds from the recently priced concurrent common stock and mandatory convertible preferred stock offerings, to fund the previously announced acquisition of the global auto care business of Spectrum Brands Holdings, Inc....

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... third institutional fund ... To date, OpenGate Capital, through its legacy and fund investments, has executed more than 30 acquisitions including corporate carve-outs, management buy-outs, special situations and transactions with private sellers across North America and Europe....

The Company intends to use the net proceeds from the offering of senior notes, together with the net proceeds from the recently priced concurrent common stock and mandatory convertible preferred stock offerings, to fund the previously announced acquisition of the global auto care business of Spectrum Brands Holdings, Inc....

I have data that says that the Northern Railways have been getting the highest amount of fund while the others are ignored. When 9.5 acres of land acquisition at Binny Mills had to be done, the Railway Board refused saying that the land is too expensive but a small piece of land in New Delhi was acquired by the railways at Rs 196 crores....

January 17 2019 2.30 AM. 0 Comments Enet lines up new team after IIF deal done. Independent.ie. Enet has finalised its new leadership team ... Email ... This follows the acquisition of the final minority stake in the business by the Irish Infrastructure Fund (IIF) last month ... ....

More. By JohnMiller and Jacob Gronholt-Pedersen ...Logistics companies are looking to build scale in a fragmented freight transport market ... 3 player ... ACQUISITIONS ... DSV could issue new shares equivalent to close to 20 percent of its share capital to help fund the deal, Andersen said. The company has a strategy of growing via acquisitions ... ....

28 percent of respondents plan to use funding for expansion, with equipment acquisition and consolidating/paying off bills each coming in at approximately 21 percent ... Products offered by QuickBridgeFunding, LLC and affiliates are business loans only....

The program also plans to do outreach to black, Latino and women entrepreneurs to interest them in the acquisitions...Funding for the acquisitions will include traditional bank financing and equity from the new owners as well as seller financing ... It hopes to launch by early summer and arrange 30 acquisitions in the first five years, he said....

The program also plans to do outreach to black, Latino and women entrepreneurs to interest them in the acquisitions...Funding for the acquisitions will include traditional bank financing and equity from the new owners as well as seller financing ... It hopes to launch by early summer and arrange 30 acquisitions in the first five years, he said....

On January 11, 2018 the Company completed the acquisitions of two Oklahoma banking corporations ... The increase in margin was primarily due to the increase in the federal funds rate throughout 2017 and 2018 and the two acquisitions in the first quarter of 2018 ... Interest free funds. ... Total interest free funds ... Effect of interest free funds....

In October, we also successfully closed the acquisition of FirstConnecticut Bancorp, the holding company for FarmingtonBank...And then the only other thing, Collyn, I would mention is when we go through these acquisitions, we're thinking a lot about funding and some of the benefits of the deposits that are coming in....

nor Lampert's hedge fund, ESL Investments, shared details of the final bid the hedge fund submitted in a bankruptcy auction this week ... Lampert engineered Kmart's $11 billion acquisition of Sears in 2005 and, through his hedge fund, is the company's largest shareholder....

I believe that the Veneto team partners believes in our plan, believe in the Company, believe in the model, and we had plenty of offers for other equity to bring another equity to fund the acquisition, but the fund is like we’re doing and how everything was working that they decided to fund it themselves....